There is a new leader in the number of patent suits filed in district courts. According to E. Leon Carter and Daniel E. Venglarik of the Dallas, Texas-based law firm of Munck Butrus Carter, P.C., in 2006, the Eastern District of Texas passed the Northern District of California in number of patent suits filed; in 2007 the Eastern District of Texas surpassed the Central District of California to become the top patent venue in the country.
As a result, some Northern California companies have found themselves in patent disputes in the unfamiliar environs of Marshall, Tyler or Texarkana, Texas which can sometimes be a disconcerting twist. However, recent trends reveal that the negative view of some of the Eastern District and its handling of patent cases is unwarranted.
Smart Business spoke to Carter and Venglarik about the significance of how patent cases are shaping up in the Eastern District of Texas.
Who’s filing patent cases in the Eastern District of Texas?
Although criticized as a ‘patent troll’ haven in 2007, the Eastern District of Texas has continued to see patent cases brought by a variety of domestic and foreign tech companies, such as Motorola, Sharp, Fujitsu/Hitachi, LG Electronics and Hewlett-Packard, to name a few.
Other patent infringement plaintiffs during that time include medical device and pharmaceutical companies, such as Medtronic and Aventis, energy sector companies, such as Weatherford and Halliburton, defense contractors, such as Raytheon, universities, such as CalTech, and ‘niche market’ enterprises, like Callaway Golf and Reebok. Even the harshest critics acknowledge that about 60 percent of recently filed Eastern District of Texas patent suits were not brought by so-called trolls.
A predictable process governed by local patent rules [modeled after those pioneered in the Northern District of California], experienced patent jurists and comparatively fast disposition times continue to attract all types of enterprises seeking to enforce their patent rights.
Do patent cases ever get transferred out of the Eastern District of Texas once filed there?
Venue is an issue that is not unique to patent cases, and is therefore controlled by the regional circuit the Fifth Circuit, for the Eastern District of Texas rather than by the specialized patent appeals court in Washington, the Federal Circuit. Recently, the Fifth Circuit overruled an Eastern District of Texas venue order in a products liability matter, stating in essence that the plaintiff’s choice of venue is not controlling. Rehearing of that decision has been requested, and a subsequent venue order in an Eastern District of Texas patent case suggests that patent venue will not necessarily be decided in the same manner as general venue due to factors such as the existence of local patent rules and fast disposition times. Nonetheless, the Fifth Circuit’s decision has the potential to improve the odds of removing a patent dispute from the Eastern District of Texas for Northern California companies in particular, since the Northern District of California has similar local patent rules and disposition times.
What else can be done to get patent cases out of the Eastern District of Texas?
Another mechanism for effectively changing forum in a patent dispute is to request reexamination of the asserted patent(s) at the
USPTO, and then request a stay of the district court proceeding until that re-examination is concluded. Unlike other top patent venues, this tactic had little success in the Eastern District of Texas until recently. Several Eastern District of Texas decisions in the past year granted stays for pending reexaminations.
Who’s winning patent cases in the Eastern District of Texas?
Out of nine Eastern District of Texas patent jury trials in 2007, the patent owner at least partially prevailed on both infringement and validity in only four cases, one of which was subsequently overturned by the judge. That overall win rate of 33 percent is about half the national average. Factor in bench trials and summary judgments in favor of the defendants and the Eastern District of Texas has become, as one commentator states, ‘demonstrably where bad patent cases go to die.’
How long do patent cases last in the Eastern District of Texas?
The Eastern District of Texas’s fast and firm trial settings which can save both sides as much as $1 million in litigation costs continue but are slipping slightly due to increasing volume. Trials in 2007 were of cases that had been pending about 16 to 20 months. Looking forward via recent scheduling orders, however, trial settings are generally at about 20 to 24 months.
How often is the Eastern District of Texas ‘getting it right’?
While the ‘right’ outcome always depends on one’s perspective, rates of reversal on appeal are telling. In 2007, the Eastern District of Texas continued its seven-year streak of extremely low reversal rates on judgments, discovery orders and claim constructions. The two judges that handle more than half of the Eastern District of Texas patent cases were never reversed in 2007.
LEON CARTER is a trial attorney and DAN VENGLARIK is a patent attorney with Munck Butrus Carter, P.C., each practicing in the firm’s Dallas and Marshall, Texas, offices. Reach them at firstname.lastname@example.org and email@example.com, respectively.